Competitor market watch: New Zealand

New Zealand’s (NZ) lamb crop in spring 2017 was estimated at 23.7 million head – down 1.1%, or 260,300 head, from 2016, according to recently released data by Statistics NZ and Beef + Lamb NZ’s 2017 Lamb Crop report*.

Breeding ewe numbers, as at 1 July 2017, eased 2.4% year-on-year, to 17.7 million head. The decline was largely in response to culling older ewes to take advantage of strong mutton prices, as well as some producers transitioning out of sheep to other land use options.

The number of ewe hoggets put to ram, however, increased 15% from 2016, to just over 1.95 million head.

Somewhat offsetting the lower breeding ewe flock, NZ’s lambing percentage for spring 2017 increased 1.9 percentage points year-on-year, to 127.3%. This is the highest annual average lambing percentage recorded for NZ, up from spring 2016 which previously held the record at 126.2%. Good climatic conditions and ewe condition at mating and lambing were both contributing factors.

Early season schedule prices reflect strong market demand for lamb in NZ – largely driven by a lack of slaughter ready lambs. Reduced availability at the beginning of the season was attributed to the lower growth rates reported across much of the country, which saw producers holding onto stock for longer to finish them.

Lamb supplies were expected to start ramping up by December, with the incentive of high schedule prices and lambs reaching acceptable slaughter weights. As a result, the total number of lambs processed during the first quarter of the NZ season (October - December) is expected to reach 4.42 million head, up 2% from the same period last year.

This first quarter is estimated to make up 23% of NZ lamb processing for the 2017-18 season. The forecast total for 2017-18 (October – September) is 19.27 million head – up just marginally from the previous year, as producers retain replacement lambs to maintain flock numbers.

Australia and NZ are the world’s largest exporters of sheepmeat, accounting for approximately 71% of global exports in 2016-17 (OECD-FAO). Reduced supplies in both countries supported lamb and mutton prices over the last year.

Although NZ lamb slaughter is expected to increase slightly, lamb exports in 2017-18 are forecast to remain fairly flat, due to lighter carcase weights.

Australia is competitively-positioned for export growth, with NZ exports anticipated to remain relatively constrained. In fact, a likely modest year-on-year increase in 2017 will see Australian lamb shipments reach a new high for the calendar year.

*It should be noted that the latest Statistics New Zealand data was released after Beef + Lamb New Zealand’s Lamb Crop 2017 report was published in November. As a result, some of the data in this article may vary slightly to the Lamb Crop report.